Question

Corporation X makes a tender offer for the shares of Corporation Y directly to its shareholders. After some discussion, Corporation X agrees to give up its tender offer and agrees not to purchase any further shares if Corporation Y agrees to buy back the stock at a premium over fair market value. Corporation Y agrees. This agreement is called ________.

Answer 1

Standstill Agreement is the correct answer.

A standstill agreement is a written agreement between a company and a shareholder. This document limits the shareholder's ability to purchase any further shares in the company. Thus, in this situation, when Corporation X agrees to give up its tender and not to acquire any further shares if Corporation Y agrees to purchase back the stock at a premium over fair market value, the agreement signed is called Standstill Agreement.